FHA Termite Inspection Requirements and Guidelines
Termites can silently destroy a home in just a few short years. The damage they create will not only result in costly repairs, but it can also result in losing a real estate sale either as a buyer or a seller. If you are buying a home with FHA insured financing, the home must pass through the required termite inspection requirement and possible treatment before the FHA loan can close.
FHA Termite Inspection Requirements – FHA termite inspection guidelines require every home to be free from termites and other wood destroying insects before the home can be financed with an FHA insured mortgage. If evidence of termites is found, the home must be treated by a licensed pest control company prior to close.
FHA termite inspection requirements
The FHA has strict guidelines around termite inspection requirements for existing homes which can be found in the HUD Handbook 4000.1. These requirements do not apply to new construction projects since there should not be any infestation in a new home.
The lender must confirm that the property is free from termites and other wood destroying insects and organisms before the property can be financed with an FHA insured loan.
The FHA lender is required to confirm the home is free of infestation or significant damage by viewing the FHA inspection report. If that inspection report recommends an additional termite inspection, then the lender must secure a copy of that as well.
Poisonous soil treatment for termites is not permitted if a well is used for the water supply on the property. An exception can be made if the lender receives assurances that the treatment will not have a negative impact on the water supply.
FHA Appraisal Requirements for Termites
The FHA appraisal is performed by an approved appraiser. This individual must inspect the perimeter of the foundation looking for potential termite infestation. This appraiser does not have to be a licensed termite inspector. In addition, the inspection process will not be as in depth as a paid inspection from a licensed termite professional.
If the FHA appraiser identifies any termite damage or evidence of prior termite treatment, then a pest control specialist would be required to also inspect the property for termites.
The rules regarding the termite inspection may vary by state. In states where termites are a common problem such as Florida, a termite inspection may be required regardless as to whether evidence of termites was found. The exception to that would be if the home was constructed with the approved materials referenced above.
There may also be local requirements over and above the standard FHA termite inspection requirements. For example, in California the termite inspection must be performed by a licensed termite professional and not by the individual who is performing the standard FHA appraisal.
Whenever a termite inspection is performed, that inspection is good for 90 days from the date that inspection occurred.
How to Detect Whether the Home Has Termites
Evidence that termites exist may not be too obvious unless you know what you are looking for. The most obvious sign would be boards that are basically falling apart with tunnels exposed. However, the key is to find the signs before it gets that bad. Here is what you can look for.
- Swarms of winged termites
- Hollow sounding wood
- Small holes in wood
- Mud tunnels
- Blistering in wood floors
You should be looking for these signs around your foundation, sill plate, basement and crawl spaces, and sub floors. These are the most common areas where termites are found.
If you notice any of these things, you should have a licensed professional do a thorough inspection of the home. Termites may exist even if you do not find these signs.
What if there is Termite Damage Found?
If termite damage is found, the following is required by the FHA:
- The home must be treated by a licensed termite or pest control company.
- Any damage created by the termites must be repaired before closing.
- Any conditions that are likely to result in additional termite damage must be remedied.
We do not recommend moving ahead with your home purchase if the termite issue has not been remedied.
Does the FHA Require Section 1 Clearance?
Section 1 items in a pest inspection include evidence of wood rot and damage from termites or evidence of the termites themselves. The lender is required to “clear” these items by making sure that the home has been treated and the damage has been repaired.
Section 2 clearance items are things that lend themselves to providing an avenue or environment for termites to exist. This would include wood touching the soil or even constant moist conditions at or near the foundation. Section 2 items are not required to be remedied before closing but it is suggested that at some point they are taken care of.
FHA 203k Loan Termite Rule
If there is termite damage present during an FHA 203k loan project, a contingency fund for emergencies of 10%-20% will be required to be kept on hand.
The 203k consultant’s communication will also need to stipulate that a termite inspection has occurred and any/all mitigation has been performed as required by the FHA guidelines.
FHA Termite Rules for New Construction
For new construction homes, a Subterranean Termite Protection Builder’s Guarantee will be required. If the home is constructed with block, masonry or steel, then no treatment or termite protection guarantee is needed. In these instances, the only wood permitted in the home is wood molding and sheathing on the roof.
If the home is located in an area that is identified having high termite activity, the builder must treat the soil and provide a one-year termite warranty.
Related Questions – FHA Termite Inspection
How much does a termite inspection cost?
A general termite inspection is included in the general FHA inspection. However, if a termite specific inspection is needed from a licensed pest control company, then you can expect to pay about $100.
Who pays for the termite inspection?
All inspections are typically paid for by the buyer unless stipulated otherwise in the sales contract.
Who pays for termite damage found during the inspection?
If termite damage is found, then the seller will need to pay for any repairs as well as the treatment.
How much does it cost to fix termite damage?
The damage created by termites will vary. It can be very minor if caught early and may be an inexpensive repair. Meanwhile, if there is significant damage, the costs could be in the tens of thousands. Especially if they have eaten through many of the supporting beams in the home.
Is a termite warranty worth the money?
A termite warranty will typically pay for any additional treatments that would be needed if termites are found again. However, the warranty will not pay for any damage that is created if the termites come back. This is likely because the pest control company would now know whether the damage is new or from the original infestation.
Depending upon the cost of the warranty, it may be worth the peace of mind to have it. A warranty can also can come in handy if you are going to sell your home in the near future.
Do lenders require a termite inspection?
Lenders will require a general inspection or appraisal and if evidence of new or prior termite damage exists, they will likely require a termite inspection from a licensed pest control company.
If the home has termites, can it be FHA approved?
Every home must pass through the FHA approval process. This includes making sure that every home is free from termites. Read our article on FHA approved homes for more information.
Should I buy a home with termite evidence?
If the home you are purchasing has termites, you can still move ahead with the purchase if the seller pays for the treatment and any damage that may exist.
Does FHA require termite inspections in Florida?
Florida is an area where termite damage is extremely common. The FHA has included Florida as one of the high-risk areas that would require a full inspection from a pest control company. If you are purchasing a home in Florida, it would be smart to pay for the inspection.
Summary – FHA Termite Inspection
Termites can absolutely destroy a home if gone untreated. However, there is no reason why you cannot purchase your dream home if you get an inspection, the home gets treated, and any existing damage is repaired.